It's Time to Re-evaluate How we Value Water

This entry was posted on January 4, 2018 by Dan DeBaun.

A new study led by researchers from the University of Oxford highlights the rapidly mounting pressure to measure, monitor and manage water on both a local and global scale, and proposes a new four-tiered approach to valuing water to ensure sustainable development and to help improve policy and water usage.

Water is recognized as a valuable and vital resource for people and cultures, as well as industry, agriculture and the environment. Having access to safe drinking water is essential for human survival and for the long term survival of civilizations. This is reflected in the huge global financial investments in water treatment and sanitation, which is estimated to be approximately US$114 billion annually in capital expenditure alone.

However, there is a growing need to re-assess the value of water. Not only is water essential for sustaining all forms of life on Earth, it also plays a key role in ensuring sustainable development. For example, all 17 of the United Nation's Sustainable Development Goals recognize the importance of water in achieving the sustainability objectives. These include developing sustainable cities, achieving peace and justice, and alleviating poverty and world hunger.

Yet, global water security is increasingly becoming an area of growing concern. Droughts, floods and pollution all have a negative impact on water resources and communities. The World Economic Forum has listed water related threats within the top five global risks for a number of years now. A 2015 water security study conducted by Oxford researchers estimated costs associated with flooding, inadequate water supply, water shortages and poor sanitation to be around US$500 billion annually. The World Bank recently highlighted the economic and social impact of water scarcity, demonstrating that a drought costs a city four times as much as a flood event, while in rural Africa, a just one drought can trigger a downward spiral resulting in ongoing poverty and deprivation across generations.

As economists, scientists and humanitarian aid groups recognize these trends, it is time for us to re-assess the value of water globally. Recognizing that the value of water extends far beyond the monetary value, the UN/World Bank High Level Panel on Water recently launched the Valuing Water initiative, which aims to guide policy and investment decision-making and encourage better governance in terms of managing water resources.

The paper, which was recently published in Science, outlines a framework that places a value on water according to the Sustainable Development Goals rather than simply placing a monetary value on water or recognizing the cultural benefits of this precious natural resource. To this end, they recommend that water should be valued and managed through a four-prong approach that simultaneously highlights the need for measurement, valuation, trade-offs and capable institutions for allocating and financing water.

"Our paper responds to a global call to action: the cascading negative impacts of scarcity, shocks and inadequate water services underscore the need to value water better", said Dustin Garrick, a researcher at Oxford University's Smith School of Enterprise and the Environment, who is the lead author of the paper. "There may not be any silver bullets, but there are clear steps to take. We argue that valuing water is fundamentally about navigating trade-offs. The objective of our research is to show why we need to rethink the value of water, and how to go about it, by leveraging technology, science and incentives to punch through stubborn governance barriers. Valuing water requires that we value institutions."

According to Richard Damania, Global Lead Economist with the World Bank Water Practice and co-author of the paper, the study shows that water is key to development and therefore it is a resource that needs to be managed sustainably. He points out that multiple water management policies will be required in order to achieve multiple goals, and that current policies are outdated and inadequate for meeting current and future water related challenges.

"Without policies to allocate finite supplies of water more efficiently, control the burgeoning demand for water and reduce wastage, water stress will intensify where water is already scarce and spread to regions of the world - with impacts on economic growth and the development of water-stressed nations," Damania warned.

Earlier this month the University of Oxford hosted a one day forum, Valuing Water for Sustainable Development, where new approaches to how water is valued, financed and allocated were discussed. Conference presentations focused on several aspects of water management, including:

1. Challenges to placing a value on water
2. New tools to address these challenges
3. Financial solutions to improve water infrastructure globally
4. Making use of water markets to address water scarcity and shocks

Oxford's Smith School of Enterprise and Research have released several video interviews with researchers who made presentations at the conference, which can be viewed here.